Answer the Following Questions Using the Information Below

question 185

Multiple Choice

Answer the following questions using the information below:
Jamal, Kareem, Rashid and Associates are in the process of evaluating its new client services for the business consulting division.
• Estate Planning, a new service, incurred $100,000 in development costs and employee training.
• The direct costs of providing this service, which is all labor, averages $27 per hour.
• Other costs for this service are estimated at $400,000 per year.
• The current program for estate planning is expected to last for two years. At that time, a new law will be in place that will require new operating guidelines for the tax consulting.
• Customer service expenses average $95 per client, with each job lasting an average of 400 hours. The current staff expects to bill 40,000 hours for each of the two years the program is in effect. Billing averages $42 per hour.
-What are estimated life-cycle revenues?

• A) $1,680,000
• B) $90,500
• C) $3,360,000
• D) $181,000

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Definitions:

Over Supplied

A market condition where the quantity of a good or service available exceeds the quantity demanded at the current price, often leading to a surplus and typically pressure on prices to decrease.

Marginal Cost

The rise in expenses for producing one more unit of a product or service.

Efficient Amount

The level of production or consumption that maximizes welfare and minimizes waste within an economy, often used in reference to optimal resource allocation.

Carbon Dioxide

A colorless, odorless gas produced by burning carbon and organic compounds and by respiration. It is naturally present in air and is a major component of the carbon cycle.